180 Billion KRW Refinancing for Redeeming Preferred Shares of 'Gwanghwamun D Tower'

[Asia Economy Reporter Lim Jeong-su] Dione Landmark, which holds redeemable preferred shares (RPS) of Seoul Gwanghwamun D Tower, has refinanced the 180 billion KRW loan borrowed to acquire the RPS. Dione Landmark is a limited liability company established with a capital of 10,000 KRW to acquire the Gwanghwamun D Tower RPS.

According to the investment banking (IB) industry on the 22nd, Dione Landmark received a 3-year maturity loan of 180 billion KRW underwritten by KB Securities. Hana Bank executed the loan through a special purpose vehicle, and Dione Landmark issued securitized bonds backed by the principal and interest repayments to secure the loan funds.

Dione Landmark provided the RPS issued by Cheongjin 23 Project Co., Ltd. as collateral to the lending group. Cheongjin 23 Project is a project company established in 2010 by the DL Group for the development of Gwanghwamun D Tower. During the D Tower development, several hundred billion KRW were raised through equity contributions and loans, and it is known that refinancing, including a paid-in capital increase in 2005, was conducted thereafter.

The loan is structured for lump-sum repayment at maturity. However, early repayment occurs if Dione Landmark redeems the RPS used as collateral early or if the early settlement date stipulated in the settlement agreement between Dione Landmark and DL (formerly Daelim Industrial) arrives. DL bears the settlement obligation, and other DL Group affiliates such as DL E&C and DL Chemical provided joint guarantees for the loan.

Seoul Gwanghwamun D Tower

At the time of Gwanghwamun D Tower construction, Cheongjin 23 Project, established by DL, had DL contributing 20% of common shares, with shareholders including the Korea Technology Finance Corporation, KB Real Estate Trust, Korea Asset Trust, and Mirae Asset Securities, forming the company in 2010. In the early development phase, Cheongjin 23 Project borrowed over 600 billion KRW from a lending group composed of financial institutions.

Subsequently, in 2015, the existing financing structure was altered through a 300 billion KRW paid-in capital increase and borrowings amounting to 550 billion KRW. During this process, initial investors such as the Korea Technology Finance Corporation, KB Real Estate Trust, and Korea Asset Trust reportedly recovered most of their investments by redeeming preferred shares.

After refinancing, the shareholders of Cheongjin 23 Project are DL holding 48% of common shares, and Dione Landmark (41.54%), DB Financial Investment (5.38%), and Dias Landmark Co., Ltd. (4.62%) holding 51.54% of preferred shares. The preferred shares were issued at 35,000 KRW per share at the time of issuance.

Among them, Dione Landmark, which holds the largest amount of preferred shares, was established as a company with a capital of 10,000 KRW in 2015 to acquire RPS during the paid-in capital increase process. The actual owner of this entity, which holds preferred shares with a higher dividend rate than common shares, has not been disclosed.